Virgin Blue reviews its entire network

The airline says it has no plans yet to cut services. Photo / Glenn Jeffrey

Virgin Blue is reviewing its entire airline network, including New Zealand domestic operations rumoured to be losing money.

The company is undertaking a wide-ranging review covering all its airline businesses, including the seats on offer and services on the ground and in the air.

Australian stock exchange listed Virgin Blue Airlines Group's operations include Pacific Blue, which flies transtasman, domestically in New Zealand, around the Pacific and to Bali and Thailand.

First NZ Capital analyst Jason Familton said with a new chief executive on board it was no surprise Virgin Blue was reviewing all its operations.

"I would suggest probably you wouldn't rule anything out of that including I guess domestic here in New Zealand would be up for discussion," Familton said.

"There have been rumours for some time ... that it's not sustainable having three [airline] players in the New Zealand market."

Virgin was rumoured to be losing $20-$30 million a year on its New Zealand domestic routes, Familton said.

"It's quite hard to do that because you say, 'Well what about the feed in to their other Pacific Blue flights' ... it's quite hard to segregate it that way but that's the number I've heard around the market."

Virgin Blue Group general manager of public affairs Danielle Keighery did not comment on reports the company lost money in its New Zealand business.

Results from the company's broad network review might start being heard in the next few months, although there were no decisions at this stage, Keighery said.

"The network review is to definitely help us understand what's working and what's not, basically," she said. "There's been no indications of us cutting services at this stage."

Virgin Blue last week cut its forecast profit before tax and exceptional items for the 2010 financial year from A$80 million to A$20-$30 million.

A company statement at that time said: "Since the guidance given earlier this month, we have continued to see rapid deterioration and increased volatility in the operating environment, particularly in respect of the leisure segment both domestically and internationally."

Keighery said Virgin Blue wanted to reduce its exposure to the leisure sector, although maintain its market share.

"The leisure sector is still a very important sector to us and we're certainly not going to be forgetting our leisure traveller but we will definitely be going after the corporate market and John [Borghetti, chief executive] has highlighted that a number of times before," she said.

Virgin Blue wanted to grow its domestic corporate market share from about 10 per cent to 15 per cent in the next 12 to 24 months.

The company review did not have implications for a proposed code share agreement with Air New Zealand, Keighery said.

"No this is a totally separate thing altogether, Keighery said.